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No shortage, domestic market stable: Simbhaoli Sugar

Published on Wed, Jun 29, 2011 at 15:56 | Source : CNBC-TV18

Updated at Wed, Jun 29, 2011 at 16:21

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Sugar is the space that has been in the limelight as stocks have been gaining between 5% and 10%. Despite the hike in the international sugar prices, in an exclusive interview with CNBC-TV18, Sanjay Tapriya, CEO of Simbhaoli Sugars says "further movement in the market will be seen if the government does some more industrialization or allow more exports."

Below is a transcript of Sanjay Tapriya's interview with CNBC-TV18. Also watch the accompanying video.

Q: What have you made of the price movement in raw sugar in the international markets? Do you think it is sustainable and prices likely to stabilize at current levels?

A: The movement came in largely because of numbers like the Brazilian figures say production is less by 4 million tones as compared to last season. However, the price will sustain at this level or may be further go up from that level.

There is no shortage of sugar but the word is so tightly balanced between supply and demand that any small movement can trigger price increase or decrease.

Q: How will the recent increase in the amount of exportable sugar impact your bottomline? Are you expecting higher realizations at all?

A: Half a million tonne has been announced by the government is a welcome move and it will impact the sugar mills. Mills can export the sugar in the international market, giving you arbitrage of Rs 40 a kg over the capacity. The domestic also remains stable in that case.

We are looking for half a million or one and a half to two and a half million tones of sugar going out. Hence, for the price to go up, it will stabilize at this level at least at a rupee plus and rupee minus levels. Further movement is to be seen if in case the government does some more industrialization or allow more exports.

Q: How much would you be exporting and what would be the average price that you would contract selling your part of stock?

A: We will be selling about 4000 tones of sugar to international market. We will be giving it to the higher end of market. Until now, we have been in a commanding position in the international market. We have to see when the release order comes in and what the international prices are and what is the premium position is, certainly Simbhaoli will be keen to export the sugar at the best possible prices.

Q: You may have some early signs of how the sugarcane crop is shaping up and the MSPs are shaping up, how do you see the margins in the new sugar year?

A: Most of the crop estimates can only be done in the later part of the monsoon season.